4.4.1.1.Uniform Electronic Transactions Act
The Uniform Electronic Transactions Act (UETA) was finalized and subsequently approved in July 1999270 and operates in 47 different states within the USA.271 Its purpose is that of removing barriers to electronic commerce by validating and effectuating electronic records and signatures.272 UETA defines an e-signature as “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.”273 UETA thus legitimizes e-signatures and establishes that handwritten signatures are equivalent to one another.274 In order for an e-signature to be deemed legally valid in terms of UETA, it will have to meet the requirements as listed in the
265 Note 158 at 199.
266 Chapter 2 of this dissertation focuses on the importance and relevance of technology neutrality in today’s marketplace.
267 2.2.1. of this dissertation.
268 P Samuelson ‘Five Challenges for Regulating the Global Information Society’ available at https://ssrn.com/abstract=234743.
269 Note 83 at 2; Section 2 (1) (h) of ECTA.
270 A Wittie, J Winn ’Electronic Records and Signatures under the Federal E-Sign Legislation and the UETA’
(2000) 56 The Business Lawyer at 296.
271 Terry Robert ‘Electronic Signatures and State Laws’ available at https://www.bcgbenefits.com/blog/electronic- signatures.
272 UETA Preparatory Note.
273 Section 2 (8) of UETA.
274 Terry Robert ‘Electronic Signatures and State Laws’ available at https://www.bcgbenefits.com/blog/electronic- signatures.
35 act275 and confirm that e-signatures can have the same legal effect as handwritten signatures.
Section 7 of UETA states that an e-signature may not be denied legal effect or enforceability solely because it is in electronic form. However, UETA only applies to electronic records and signatures relating to a transaction. A transaction is defined in UETA as interactions between people relating to business, commercial and governmental affairs.276
Furthermore, UETA follows a technologically neutral approach by noting that no specific technology is required in order to create a valid e-signature.277 This is in line with the underlying principles of the Model Law (1996) and the Model Law (2001) which advise countries to allow for the flow and development of newer technology models.278 UETA and the Model Law (1996) share a common attribute and that is their minimalistic nature.279 Both documents are instructive and aim to promote the imposition of minimalism in its regulation of e-signatures.280 While technology is constantly improving, it is suggested that South African legislation should align our legal infrastructure with this approach.281 By prescribing technology specific requirements for the validity of e-signatures, the risk of legislation becoming outdated becomes a reality. It is imperative, for the purposes of sustainability, to promulgate rules and regulations that consider the rapid change in technology.282 This in turn promotes the growth of e-commerce.
UETA allows for a broad interpretation of the term “agreement” between the parties. As long as the parties have agreed to conduct the transaction electronically, UETA will apply to the intended transaction and allows for communication on a global scale.283 It is clear that UETA has the broad purpose of intending to remove barriers to e-commerce. The Act strives to facilitate electronic transactions by providing a broad scope of application and striving for technology neutrality. Sections 7 and 9 of UETA legally recognise an e-signature as being effective and enforceable in a transaction by attributing the record to a person by virtue of his signature.
275 An intention to sign, consent, an association of the signature with the record and record retention.
276 Section 3 of UETA.
277 Uniform Electronic Transactions Act with Prefatory Note and Reporter’s Notes (1999) at 3.
278 UNCITRAL Model Law (2001) Guide to Enactment.
279 A Boss ‘The Uniform Electronic Transactions Act in a Global Environment’ (2001) 37 Idaho Law Review 2 at 288.
280 A Boss ‘The Uniform Electronic Transactions Act in a Global Environment’ (2001) 37 Idaho Law Review 2 at 289.
281 Ibid.
282 Note 280.
283 Terry Robert ‘Electronic Signatures and State Laws’ available at https://www.bcgbenefits.com/blog/electronic- signatures.
36 In the implementation of UETA, the drafting committee considered four imperative concepts on which UETA is premised. These were firstly that the barriers surrounding the growth and development of e-commerce should be eliminated. Secondly, parties to a transaction should have the liberty of choosing the medium through which they prefer to transaction, and despite the medium they have chosen, it should be subject to the same legal infrastructure. Thirdly, the legal framework should practice neutrality by not prescribing specific technology. Lastly States should practice uniformity in its regulation of e-signatures as the internet knows no boundaries.284 UETA thus applies the above principles by affirming that a record or signature shall not be denied legal effect or validity solely because it is in an electronic form285 thus removing existing barriers to e-commerce. Section 5 of the Act states that the Act will apply only to transactions where parties have agreed to conduct transactions electronically. What constitutes consent will be derived from their conduct.286 This ensures that party to a transaction has the liberty of choosing the medium through which to transact. Be it via a paper-based system or electronic means, the legal effect will be identical. This is reiterated by section 7 of UETA as explained above. UETA is also not technology specific in that it defines an e- signature in Section 2 (8) of the Act broadly and is designed to ensure that no matter how an e- signature is executed, it will be deemed to have met the requirements for an e-signature in terms of act. In its regulation of e-signature, UETA assures technological neutrality by virtue of its non-prescriptive requirements.
4.4.1.2.The E-Sign Act
On 14th June 2000 and for the purpose of facilitating the further growth of e-commerce, the Senate and House of Representatives introduced a new Act known as the Electronic Signatures in Global and National Commerce Act (E-sign Act).287 The E-sign Act was only given effect on 1st October 2000 and aims to give legal effect and validity to e-signatures, electronic contracts and electronic records and has also created a standard in the USA for the regulation of e-signatures. The E-sign Act regulates electronic transactions in a business and consumer setting. The act is similar to UETA in that it is not prescriptive in the regulation of electronic transactions. Being prescriptive in the regulation of electronic transactions entails putting
284 P B Fry ‘Introduction to the Uniform Electronic Transactions Act: Principles, Policies and Provision’ (2001) 37 Idaho Law Review 2 at 249.
285 Section 7 of UETA.
286 Section 5 (2) of UETA.
287 Preamble to the Electronic Signatures in Global and National Commerce Act.
37 certain barriers and restrictive requirements which in turn create an obstruction to the growth of e-commerce.
One of the purposes of the E-sign Act is to ensure that “with respect to any transaction in or affecting interstate or foreign commerce – a signature, contract or other record relating to a transaction will not be denied legal effect, validity or enforceability solely because it is in electronic form.”288 Section 106 (5) of the E-sign Act thus promotes technological neutrality in that it does not prescribe any minimum requirements for the validity of an e-signature.
Section 106 (5) defines an e-signature as an electronic sound, symbol or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record. The above definition simply requires an intent to be bound by the e-signature executed without preferring specific technology or authentication.289 An e- signature may be executed by virtue of a computerized depiction of a manuscript signature or a typed name at the end of an electronic message etc.290 This legal infrastructure actively facilitates the growth e-commerce in an ever-changing technological climate.
As we shift from a paper-based system and move into a realm controlled by technology, it is essential that we design our legal infrastructure in a manner that supports the growth and development of e-commerce, in particular e-signatures. We require legislation that eliminates confusion and establishes clear standards and requirements. UETA and the E-sign Act achieve this by virtue of their non-prescriptive requirements in the regulation of e-signatures. Both Acts create uniformity in that they are non-prescriptive and flexible291 and South Africa will benefit from an adoption of this approach. As it stands, the provisions of Section 13 (1) are technology specific in that they prescribe the use of digital signature technology for the conclusion of an AES. ECTA requires e-signature provisions that are non-prescriptive and flexible while still achieving security.
4.4.2. Germany
Germany is a member of the EU and accepts e-signatures as being of legal effect and validity.292 In 1997, Germany adopted the SigG (also known as the Signaturgesetz). SigG had the purpose
288 Section 101 (9) of the E-sign act.
289 S R Zennick ‘The E-Sign Act: The Means to Effectively Facilitate the Growth and Development of E- Commerce’ (2001) 76 Chicago Kent Law Review 3 at 1982.
290 Note 58 at 1425.
291 S R Zennick ‘The E-Sign Act: The Means to Effectively Facilitate the Growth and Development of E- Commerce’ (2001) 76 Chicago Kent Law Review 3 at 1986.
292 Note 58 at 1418.
38 of creating general conditions for digital signatures.293 Germany remain one of the first EU member States to have enacted digital signature laws based on PKI infrastructure.294 SigG was limited to the regulation of digital signatures only. While the use of a digital signature will be deemed to be secure, the setting particular technical standards is an issue.295
The fundamental flaw of SigG was that it did not afford digital signatures the same legal weight as manuscript signatures.296 Germany adopted an additional Act referred to as the Trust Services Act (“TSA”), which came into effect in July 2017 and largely follows the provisions of EIDAS.297 The TSA aims to facilitate the use of e-signatures in Germany in conjunction with the German Civil Code (“GCC”).298 The GCC also governs the use of e-signatures and states that simple e-signatures and advanced e-signatures do not hold the same legal validity as their handwritten counterparts and are therefore not of the same legal effect.299 Section 126a of the GCC states that where an e-signature is required to replace its handwritten counterpart, only a qualified e-signature will suffice. Rossnagel and Zibuchka state that qualified e-signatures have not been a success since inception, given their complex certification requirements.300 A qualified e-signature is based on a qualified certificate and is generated utilizing a secure creation unit demanding high technical standards.301
An accredited qualified e-signature requires that the entire procedure be inspected and authenticated by an independent entity. This technical check is the underlying difference between a qualified electronic signature and an accredited qualified electronic signature. While guaranteeing a high level of reliability and security, this approach is outdated.302
293 Section 1 of SigG.
294 K M Brisch, C E Haupt ‘Information Technology meets Healthcare: The Present and Future of German and European e-Health initiatives’ (2009) 12 DePaul Journal of Health Care Law 1 at 136.
295 C Kuner, A Miedbrodt ‘Written Signature Requirements and Electronic Authentication: A Comparative Perspective’ (1999) 143 EDI Law Review 6 at 148.
296 A Lincoln ‘Electronic Signature Laws and the need for Uniformity in the Global Market’ (2004) 8 Journal of Small and Emerging Business Law 1 at 76.
297 C Bierekoven, P Bazin, T Kozlowski ‘Electronic signatures in German, French and Polish law perspective’
(2004) Digital Evidence and Electronic Signature Law Review at 7.
298 S Petrack ‘E-Signature Regulations: Germany’ available at https://ally-law.com/e-signature-regulations- germany/.
299 Section 126a of the German Civil Code (2002).
300 H Rossnagel, J Zibuchka ‘Integrating Qualified Electronic Signatures with Password Legacy Systems’ (2007) 4 Digital Evidence and Electronic Signature Review at 7.
301 K M Brisch, C E Haupt ‘Information Technology meets Healthcare: The Present and Future of German and European e-Health initiatives’ (2009) 12 DePaul Journal of Health Care Law 1 at 138.
302 B B Aalberts, S van der Hof ‘Digital Signature Blindness Analysis of Legislative Approaches to Electronic Authentication’ (2000) 7 EDI Law Review 1 at 19.
39 Scott Lowry, CEO of a US Certification Authority, has argued that, in order to benefit from the power of the internet, parties must have the same level of confidence in an online transaction as they would when transacting on paper.303 It is necessary that a country’s legal infrastructure adopt a harmonized definition of what constitutes an “electronic signature,” one that passes muster with its manuscript counterpart, respects all national legal infrastructures and achieves party autonomy.304 The main legal instruments that regulate the use and effects of e-signatures in Germany are the TSA and the GCC.305 Both of which state that simple e- signatures and advanced e-signatures do not satisfy the written form requirement in Germanic law, only a qualified e-signature satisfies this requirement.306 However, qualified e-signatures do not serve a practical purpose with its complex nature, which ascribes to its market failure.307 Hence, complex regulations regarding e-signatures do not fare well in the advancement of e- commerce.
4.4.3. China
In 2007, China was said to become the hub of the world’s largest online market.308 Prior to that, and taking effect in April 2005, China enacted a new piece of legislation that intended to legalise electronic transactions. This codification is known as the PRC Electronic Signature Law (PRC Act) also known as the Peoples Republic of China Signature Law. The PRC Act was enacted for the purposes of standardizing e-signatures, validating the legal effects of e- signatures and safeguarding transacting parties’ rights and interests.309
Article 2 of the PRC Act defines an e-signature as data included or attached in electronic form for the purpose of identifying the signer and proof that the signer takes cognisance of the content, he/she is attesting to. The principle of party autonomy expresses itself throughout the
303 S E Blythe ‘Digital Signature Law of the United Nations, European Union, United Kingdom and United States:
Promotion of Growth in E-Commerce with Enhanced Security’ (2005) 11 Richmond Journal of Law &
Technology 2 at 19.
304 C Kuner, A Miedbrodt ‘Written Signature Requirements and Electronic Authenticaiton: A Comparative Perspective’ (1999) 143 EDI Law Review 6 at 148.
305 Note 58 at 1418.
306 Note 58 at 1418.
307 P Krawczyk ‘When the EU Qualified Electronic Signature Becomes an Information Services Preventer’ (2010) Digital Evidence and Electronic Signature Law Review at 7.
308 S E Blythe ‘Digital Signature Law of the United Nations, European Union, United Kingdom and United States:
Promotion of Growth in E-Commerce with Enhanced Security’ (2005) 11 Richmond Journal of Law &
Technology 2 at 91.
309 Article 1 of the PRC Act.
40 PRC Act as the Act states that parties may agree, or not, to use e-signatures when transacting with one another.310
The PRC Act was amended once in 2015 and a second time as recent as the year 2019. The PRC Act, however, states that an e-signature may not be used to authenticate marriage certificates or applications involving the stoppage of water, heat or gas supply and other utility services.311 This is perhaps owing to the importance of the abovementioned documents. This however shows a lack of confidence in e-communication as recent as 2019.
The PRC Act distinguishes between a simple e-signature, advanced e-signature and a qualified e-signature but does not treat them different from one another. Where parties agree to an electronic transaction, they have the election of either a simple, advanced or qualified e- signature.312
Article 13 of the PRC Act discusses what constitutes a “reliable” e-signature. In terms of Article 13, four requirements must be met. Firstly, when the e-signature creation data is used, it must be proprietary to the party utilizing the signature. Secondly, at the time the electronic contract is signed, the e-signature creation data must be controlled only by the party signing. Thirdly, any change to the e-signature must be able to be detected. Lastly, any change to the content of the data message after signing must be capable of detection.313 Article 34 defines creation data as characters and codes that are used in the course of electronically signing an electronic document and that reliably connects the e-signature to the signatory. Article 13 of the PRC Act is similar to Article 6 of the Model law (2001) in that they denote similar requirements for what is deemed a reliable e-signature. Article 6 of the Model Law (2001) states that an e-signature will be deemed reliable if the signature creation data is linked to the signatory and no other person, the signature creation data at the time of signing was under the sole control of the signatory, any alteration made to the e-signature is detectable and any alteration made to the contents of the information is detectable. Both articles are extremely similar in the requirements they prescribe. Article 14 of the PRC Act states that a reliable e-signature shall have the same legal effect as that of a handwritten signature. These articles ensure that e-signatures are afforded the same recognition as handwritten signatures.314
310 Article 3 of the PRC Act.
311 Article 3 of the PRC Act.
312 Note 58 at 1441.
313 Article 13 of the PRC Act.
314 UNCITRAL Model Law on Electronic Signatures with Guide to Enactment (2001) at 52.
41 In conclusion, China has adopted somewhat of a hybrid approach by providing validity to all forms of electronic signatures while still ranking digital signatures with the highest status. The PRC Act outlines what constitutes a reliable e-signature in terms of the act without limiting a contracting party to the use of a specific technology, thus ensuring technology neutrality.315 Several forms of technologies could be used to electronically sign a document hence hybrid systems, such as the system in China are welcomed as they abide by the internationally accepted principle of technology neutrality.316